Answer:
-$1.6
Explanation:
Complete Question:
A charity organization hosts a raffle drawing at a fund raising event. The organization sells 2500 tickets at a price of $8 each. Winning tickets are randomly selected, with 30 prizes of $100, 10 prizes of $500, and 1 grand prize of $8000. Find the expected winnings for a person buying 1 ticket.
Solution:
The expected value is the probability of an event multiplied by its earnings. IF there are more than 1 event, the expected value is sum of all those products.
So,
The probability of winning 1st prize is 1/2500
Probability of 10 prize = 10/2500
Probability of 30 prize = 30/2500
Value of 1st prize 8000
Value of 10 prize = 500
Value of 30 prize = 100
Now, expected value would be:
8000(1/2500) + 500(10/2500) + 100(30/2500) = $6.4
Since buying ticket costs 8, the expected value would be 6.4 - 8 = -$1.6